QUESTION 1

Ahmad is an ICAEW Chartered Accountant working as a senior tax adviser for a firm of

accountants. He had a meeting with Seng Joo, a potential new client who has an unincorporated

business. Seng Joo plans to expand his business. He is not satisfied with the services provided

by his current tax adviser. As such he approaches Ahmad's firm to ask them to be his new tax

adviser.

Required:

Identify two fundamental principles that Ahmad's firm should consider. Explain the procedures

that Ahmad's firm should follow before they accept Seng Joo as their new client.

(7 marks)

QUESTION 2

(a) Ali purchased a landed property located in Petaling Jaya. According to the Sales and

Purchase Agreement (SPA) dated 1 Oct 2019, the purchase consideration is RM800,000.

In November 2019, he obtained a loan from CIMB for RM500,000 for the purchase of the

property. He will settle the remaining balance using his own savings. The bank required

him to purchase a mortgage reducing term assurance policy and the premium of RM10,000

was capitalized, making the total loan to be RM510,000.

Due to an oversight, the SPA was not submitted until 31 Jan 2020 and the stamp duty was

paid on that date.

He also owned a two-bedroom house which he has let to tenants for many years. He decided

to transfer this house to his spouse.

Required:

(i) Compute the total stamp duty payable on the purchase of the property and the loan

agreement. Explain when the SPA needs to be stamped and calculate the amount of

penalty payable.

(5 marks)

(ii) Explain the stamp duty implications of the transfer of the two-bedroom house to his

spouse. (1 marks)

(b) Sandy sold her condominium on 17 May 2019 for RM450,000. Up to the time of sale,

Sandy had incurred an interest charge of RM20,700 on the mortgage loan she took to

buy the condominium.

Sandy acquired the condominium on 17 April 2016 for RM290,000. She incurred the

legal fees of RM2,900 and a stamp duty of RM8,700 on the acquisition. While holding

the property, a fire destroyed the dining hall and she received an insurance compensation

of RM6,500.

In February 2017, Sandy received an offer to sell the condominium to Jason, who paid

a deposit of RM10,500. However, Jason decided not to proceed with the deal and

forfeited the deposit. Sandy then engaged an agent to sell the property and incurred the

agency fee of RM13,500, valuation fee of RM900 and advertisement cost of RM400 in

order to dispose of the property.

Required:

With reference to the Real Property Gains Tax 1976 (as amended):

(i) Calculate the disposal price of the condominium. (3 marks)

(ii) Calculate the acquisition price of the condominium. (4 marks)

(iii) Calculate the real property gains tax (RPGT) arising from the disposal of the

condominium. (3 marks)